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A.M. Best's report on the property-casualty outlook said that the personal lines segment and reinsurance lines’ ratings are stable for this year, while commercial lines turned from stable to negative.

Personal lines

The personal lines outlook is attributed to the stability of the automobile line; improving risk management in the face of volatility in the homeowners line; and solid risk adjusted capitalization, the rating organization said. It also said operating performance is expected to remain adequate.

Workers compensation and other liability already have turned from favorable to modestly adverse reserve development.

A.M. Best does not expect rating actions to move profoundly negative because: many insurers have priced rationally through the development of improved pricing tools in recent years; insurers have strengthened enterprise risk management practices; insurers emphasized underwriting profitability; and commercial lines maintains strong capitalization, which will cushion any deterioration in operating results.Reinsurance

A.M. Best said outlook on reinsurance remains stable because global reinsurers are maintaining strong capitalization; underwriting performance was reasonable through mid-December 2010, mitigating losses from global catastrophes that occurred mostly in the first half of the year; investment markets continued to recover in terms of realized and unrealized investment gains; and the segment saw small net investment income return.

Factors that could change the reinsurance outlook to negative include the inability to effectively manage capital in both the short and long term; further erosion in pricing, terms and conditions, especially on longer tailed casualty business; and the potential effect of inflation on loss reserves, according to A.M. Best.